Xponential Fitness, Inc. Q4 2025 Earnings Call Summary – Moby
Management attributed the 2025 performance moderation to marketing and lead management missteps that created top-of-funnel challenges, most notably impacting the Club Pilates brand.
The company completed a significant corporate reorganization, including the divestiture of underperforming brands and a transition to an outsourced retail model to focus on core franchising.
A new 35-person field operations team has been deployed to provide on-the-ground coaching for franchisees, specifically targeting lead-to-membership conversion and studio profitability.
Club Pilates remains the primary growth engine, with management identifying potential to double the domestic network despite current same-store sales pressure.
The strategic shift prioritizes long-term durable growth over short-term EBITDA maximization, leading to intentional investments in member acquisition and franchisee support.
Management acknowledged that historical rapid scaling through acquisitions limited their ability to maintain best-in-class support capabilities, necessitating the current operational pivot.
2026 guidance assumes negative low single-digit same-store sales as the company works through the timing and extent of new organic growth initiatives.
The company plans to pilot and implement new pricing structures and membership packages in Q2 2026, informed by a comprehensive Q4 pricing study.
International expansion is expected to become a larger portion of the growth mix, with high demand for Club Pilates specifically in Asia and Europe.
Capital expenditures of $6 million to $10 million will be focused on digital transformation, including upgrading studio member management systems and brand websites.
Management expects closure rates to stabilize in the low to mid-single digits as the portfolio matures and underperforming international licenses are addressed.
The company reached a proposed $17 million settlement with the FTC to resolve all alleged claims, intended to remove a significant source of stakeholder uncertainty.
A $525 million debt refinancing was completed in December 2025, which included the full repurchase of all outstanding convertible preferred stock to eliminate dilution.
The transition to an outsourced merchandise model is expected to provide a high single-digit to low double-digit million dollar EBITDA enhancement in 2026.
Approximately 30% of North American and international licenses are currently more than 12 months behind schedule and are classified as inactive.
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Management explained that Q4 pricing was diluted by aggressive Black Friday promotions intended to drive top-of-funnel member acquisition.
Pricing is expected to normalize in Q1 and Q2 as promotional package holders convert to traditional memberships.
Management expressed urgency in improving StretchLab’s performance, specifically targeting active older adults impacted by Medicare Advantage changes.
The company remains open to further divestitures but is currently focused on operational ‘unlocks’ for brands like YogaSix and BFT.
Management noted that Club Pilates AUVs near $1 million make it difficult to achieve high positive comps due to physical reformer capacity limits.
The growth strategy for the brand will focus on volume through new unit openings rather than relying solely on organic same-store sales growth.
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